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Interim Report

2017

中報二零一七年

股份代號：1308

（於開曼群島註冊成立的有限公司）

Contents

INTERIM REPORT 2017 1

2 Corporate Information

4 Financial and Operating Highlights

5 Management Discussion and Analysis

13 Other Information

21 Condensed Consolidated Interim Financial Information

21 Condensed Consolidated Statement of

Profit or Loss and Other

Comprehensive Income


Financial Position


Changes in Equity

27 Condensed Consolidated Statement

of Cash Flows

29 Notes to the Condensed Consolidated Interim

Financial Statements

Corporate Information

SITC International Holdings Company Limited2

DIRECTORS

Executive Directors

YANG Shaopeng (Chairman)

YANG Xianxiang (Vice-Chairman and Chief Executive Officer)

LIU Kecheng

XUE Peng (Joint Company Secretary)

LAI Zhiyong

XUE Mingyuan

Independent Non-Executive Directors

TSUI Yung Kwok

YEUNG Kwok On

LO Wing Yan, William

NGAI Wai Fung

BOARD COMMITTEES

Audit Committee

TSUI Yung Kwok (Chairman)


NGAI Wai Fung

Remuneration Committee

YEUNG Kwok On (Chairman)

NGAI Wai Fung

TSUI Yung Kwok

YANG Shaopeng

YANG Xianxiang

Nomination Committee

YANG Shaopeng (Chairman)


NGAI Wai Fung

YANG Xianxiang

YEUNG Kwok On

Disclosure Committee

YANG Xianxiang (Chairman)

LIU Kecheng


LAI Zhiyong

XUE Mingyuan

REGISTERED OFFICE

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

CORPORATE HEADQUARTER

21/F, World Trade Centre

280 Gloucester Road

Causeway Bay

Hong Kong

AUTHORISED REPRESENTATIVES

LIU Kecheng


JOINT COMPANY SECRETARIES

XUE Peng

CHAN Wai Ling (FCS, FCIS (PE))


PRINCIPAL SHARE REGISTRAR

Royal Bank of Canada Trust Company (Cayman) Limited

4th Floor, Royal Bank House

24 Shedden Road, P.O. Box 1586


Cayman Islands

HONG KONG SHARE REGISTRAR

Computershare Hong Kong Investor Services Limited

Shops 1712-1716

17th Floor, Hopewell Centre

183 Queen’s Road East

Wanchai

Hong Kong

PLACE OF LISTING

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”)

NAME OF STOCK

SITC International Holdings Company Limited (“SITC”)

STOCK CODE

01308

PRINCIPAL BANKERS (By alphabetical order)

ANZ Bank

Bank of America

Bank of China

Bank of China (Hong Kong) Limited

China Merchants Bank

Citibank, N.A

Standard Chartered Bank (HongKong) Limited

The Hongkong and Shanghai Banking Corporation Limited

AUDITORS

Ernst & Young

LEGAL ADVISORS

As to Hong Kong law:

Sidley Austin

Level 39, Two International Finance Centre

8 Finance Street

Central

Hong Kong

As to Cayman Islands law:

Conyers Dill & Pearman

Cricket Square

Hutchins Drive

P.O. Box 2681


Cayman Islands

WEBSITE

www.sitc.com

Financial and Operating Highlights


Management Discussion and Analysis


OVERVIEW

Business Review

SITC is one of Asia’s leading shipping logistics companies that

provides integrated transportation and logistics solutions.

During the six months ended 30 June 2017, the Group’s sea freight

logistics business continued to provide container shipping services

that focus exclusively on the intra-Asia market as the Company

believes that the intra-Asia trade market will continue to experience

healthy growth. As of 30 June 2017, the Group operated 59 trade

lanes, including 10 trade lanes through joint services and 21 trade

lanes through container slot exchange arrangements. These trade

lanes covered 63 major ports in the Mainland China, Japan, Korea,

Taiwan, Hong Kong, Vietnam, Thailand, the Philippines, Cambodia,

Indonesia, Singapore, Malaysia and Brunei. As of 30 June 2017,

the Group operated a fleet of 72 vessels with a total capacity of

94,882 TEU, comprised of 47 self-owned (62,060 TEU) and 25

chartered vessels (32,822 TEU), with an average age of 8.8 years.

44 of these 72 vessels were of the 1,000 TEU type. For the six

months ended 30 June 2017, US$0.8 million out of US$4.6 million

of paid out capital expenditure was attributable to vessel purchases.

Revenue generated by the Group’s sea freight logistics business

before inter-segment elimination for the first half of 2017 increased

by approximately 10.8% from US$469.7 million for the six months

ended 30 June 2016 to US$520.5 million for the corresponding

period in 2017. The increase was mainly attributable to the increase

in the shipping volume from 1,094,470 TEU for the six months

ended 30 June 2016 to 1,257,301 TEU for the corresponding period

in 2017.

The land-based logistics business is another key component of

the Group’s business model, which comprised freight forwarding,

shipping agency, depot and warehousing, land transportation,

ship brokerage, and terminal businesses. As of 30 June 2017, the

Group’s shipping agency and freight forwarding network covered 64

major cities, including Mainland China, Japan, Korea, Hong Kong,

Vietnam, Thailand, Singapore, the Philippines, Cambodia, Indonesia

and Malaysia. The Group also operated (including through joint

ventures) approximately 1,035,233 m2 of depot and 102,634 m2 of

warehousing space. Revenue generated by the Group’s land-based

logistics business before inter-segment elimination for the first half

of 2017 increased by approximately 9.4% from US$343.6 million

for the six months ended 30 June 2016 to US$375.8 million for the

corresponding period in 2017. The increase was primarily attributable

to the increase in the freight forwarding volume from 817,434 TEU

for the six months ended 30 June 2016 to 900,213 TEU for the

corresponding period in 2017.

With the Group’s continuous business expansion, the Company

will continue to optimize its unique business model and expand

its intra-Asia service network. At the same time, the Company will

continue to expand the Group’s fleet by capturing vessel price

dynamics, so as to keep pace with the development of the business

and secure a long-term competitive cost position. Through the

above measures, together with the continuous enhancement on

the information technology systems and the improvement in the

management efficiency of the Group, the Company will strive for the

goal in becoming a world-class integrated logistics service solutions

provider.



Financial Overview

For the six months ended 30 June

2017 2016 2017 2016 2017 2016 2017 2016

Sea freight logistics Land-based logistics Inter-segment sales Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Revenue 520,504 469,750 375,835 343,593 (250,786) (209,055) 645,553 604,288

Cost of sales (469,607) (424,211) (313,017) (285,197) 250,786 209,055 (531,838) (500,353)

Gross profit 50,897 45,539 62,818 58,396 113,715 103,935

Other income and gains

(excluding bank interest income and

other investment income) 4,283 3,125 72 917 4,355 4,042

Administrative expenses (7,972) (9,051) (25,729) (26,007) (33,701) (35,058)

Share of profits of:

Joint ventures — — 5,079 5,528 5,079 5,528

Associates — — 352 293 352 293

Other expenses and losses (279) (2,398) — (10) (279) (2,408)

Segment results 46,929 37,215 42,592 39,117 89,521 76,332

Finance costs (4,176) (3,553)

Bank interest income and other

investment income 4,169 1,952

Profit before tax 89,514 74,731

Income tax (3,680) (3,420)

Profit for the period 85,834 71,311

Profit attributable to:

Shareholders of the Company 85,078 70,521

Non-controlling interests 756 790

85,834 71,311

Revenue

The Group’s total revenue after inter-segment elimination increased

by approximately 6.8% from approximately US$604.3 million for the

six months ended 30 June 2016 to approximately US$645.6 million

for the corresponding period in 2017. The increase was primarily

attributable to the increase in container shipping volume and freight

forwarding volume in both of the sea freight logistics and land-based

logistics businesses.

Cost of Sales

The Group’s cost of sales after inter-segment elimination increased

by approximately 6.3% from approximately US$500.4 million for the

six months ended 30 June 2016 to approximately US$531.8 million

for the corresponding period in 2017. The increase was primarily

attributable to the significant increase in bunker cost.


Gross Profit and Gross Profit Margin

As a result of the foregoing, the gross profit increased from

approximately US$103.9 million for the six months ended 30 June

2016 to approximately US$113.7 million for the six months ended

30 June 2017. The Group’s gross profit margin increased from

approximately 17.2% for the six months ended 30 June 2016 to

approximately 17.6% for the corresponding period in 2017.

Other Income and Gains (excluding bank interest income

and other investment income)

For the six months ended 30 June 2017, other income and gains

(excluding bank interest income and other investment income)

increased by approximately US$0.4 million from approximately

US$4.0 mil l ion for the six months ended 30 June 2016 to

approximately US$4.4 million for the corresponding period in 2017.

There was no material fluctuation to the amount.

Bank Interest Income and Other Investment Income

The Group’s bank interest income and other investment income was

approximately US$4.2 million and US$2.0 million for the six months

ended 30 June 2017 and 2016, respectively. The increase was

mainly attributable to the increase in the average amount available for

investment and the average return generated during the six months

ended 30 June 2017.

Administrative Expenses

The Group’s administrative expenses decreased from approximately

US$35.1 mill ion for the six months ended 30 June 2016 to

approximately US$33.7 million for the corresponding period in 2017,

representing a decrease of approximately 4.0%. The decrease was

primarily a result of the on-going cost control and the increased

management efficiency applied in the Group on the whole.

Other Expenses and Losses

The Group’s other expenses and losses were approximately US$0.3

million and US$2.4 million for the six months ended 30 June 2017

and 2016, respectively. The decrease was mainly attributable to

the fair value loss on derivative instruments turned from a loss of

approximately US$2.2 million in 2016 to a gain of approximately

US$0.8 million in 2017.

Finance Costs

The Group’s finance costs increased from approximately US$3.6

million for the six months ended 30 June 2016 to approximately

US$4.2 million for the six months ended 30 June 2017. The increase

was mainly attributable to the increase in both average bank

borrowing balance and borrowing interest rate.

Share of Profits of Joint Ventures

The Group’s share of profits of joint ventures decreased by

approximately US$0.4 million from approximately US$5.5 million for

the six months ended 30 June 2016 to approximately US$5.1 million

for the six months ended 30 June 2017. There was no material

fluctuation to the amount.

Share of Profits of Associates

The Group’s share of profits of associates was approximately

US$0.4 million and US$0.3 million for the six months ended 30 June

2017 and 2016, respectively. There was no material change in the

amount.

Profit before Tax

As a result of the foregoing, the Group’s profit before tax increased

by 19.8% from approximately US$74.7 million for the six months

ended 30 June 2016 to approximately US$89.5 million for the


Income Tax Expense

The Group’s income tax expense was approximately US$3.7 million

and US$3.4 million for the six months ended 30 June 2017 and

2016, respectively. The increase was primarily attributable to the

increase in taxable profit of the Group.

Profit for the Period

The Group’s profit for the six months ended 30 June 2017 was

approximately US$85.8 mill ion, representing an increase of

approximately US$14.5 million over the profit of US$71.3 million for

the corresponding period in 2016.



Sea Freight Logistics

The following table sets forth selected income statement data for the Group’s sea freight logistics segment for the periods indicated:


2017 2016

Amount

(US$’000)

% of segment

revenue

Amount

(US$’000)

% of segment

revenue

Income Statement Data:

Segment revenue 520,504 100.0% 469,750 100.0%

Cost of Sales (469,607) (90.2)% (424,211) (90.3)%

Equipment and cargos transportation costs (285,476) (54.8)% (270,114) (57.5)%

Voyage costs (103,360) (19.9)% (73,126) (15.6)%

Container shipping vessels cost (73,717) (14.2)% (73,273) (15.6)%

Dry bulk vessel costs (7,054) (1.3)% (7,698) (1.6)%

Gross Profit 50,897 9.8% 45,539 9.7%

Other income and gains (excluding bank

interest income and other investment income) 4,283 0.8% 3,125 0.6%

Administrative expenses (7,972) (1.5)% (9,051) (1.9)%

Other expenses and losses (279) (0.1)% (2,398) (0.5)%

Segment results 46,929 9.0% 37,215 7.9%

Revenue

Revenue of the Group’s sea freight logistics business before inter-

segment elimination increased by approximately 10.8% from


2016 to approximately US$520.5 million for the six months ended 30

June 2017. This increase was a combined effect of (i) the increase

in container shipping volume from 1,094,470 TEU for the six months

ended 30 June 2016 to 1,257,301 TEU for the corresponding period

in 2017; and (ii) the decrease in average container shipping freight

rate (excluding slot exchange fee income) from US$399.3/TEU

for the six months ended 30 June 2016 to US$388.1/TEU for the


Cost of Sales

The cost of sales of the Group’s sea freight logistics business before

inter-segment elimination increased by approximately 10.7% from


2016 to approximately US$469.6 million for the corresponding

period in 2017. Such increase was primarily attributable to the

increase in bunker cost.

Gross Profit

As a result of the foregoing, the Group recorded gross profit of

approximately US$50.9 million for its sea freight logistics business

for the six months ended 30 June 2017, representing an increase

of approximately US$5.4 million as compared to approximately

US$45.5 million for the corresponding period in 2016.




For the six months ended 30 June 2017, the other income and

gains (excluding bank interest income and other investment income)

increased to approximately US$4.3 million for the six months

ended 30 June 2017 from approximately US$3.1 million for the

corresponding period in 2016. The increase was a combined effect

of (i) the fair value gains and realised gain on settlement of derivative

instruments increased by approximately US$2.1 million in 2017

compared to 2016; (ii) the gains on disposal of containers increased

by approximately US$0.8 million in 2017 compared to 2016; and (iii)

the decrease in the government subsidies of approximately US$1.9

million.


Administrative expenses of the Group’s sea freight logistics

business decreased from approximately US$9.1 million for the six

months ended 30 June 2016 to approximately US$8.0 million in the

corresponding period of 2017. The decrease was a result of the on-

going cost control and the increased management efficiency applied

in the Group on the whole.


Other expenses and losses decreased from approximately US$2.4


US$0.3 million for the corresponding period in 2017. It was mainly

attributable to the fair value loss on derivative instruments turned

from a loss of approximately US$2.2 million in 2016 to a gain of

approximately US$0.8 million in 2017.

Segment Results

As a result of the foregoing, the segment results of the Group’s sea

freight logistics business increased by approximately US$9.7 million

from approximately US$37.2 million for the six months ended 30

June 2016 to approximately US$46.9 million in the corresponding

period in 2017.

Land-Based Logistics

The following table sets forth selected income statement data for the Group’s land-based logistics segment for the periods indicated:


2017 2016

Amount

(US$’000)

% of segment

revenue

Amount

(US$’000)

% of segment

revenue

Income Statement Data:

Segment revenue 375,835 100.0% 343,593 100.0%

Freight forwarding and shipping agency 352,156 93.7% 321,009 93.4%

Other land-based logistics business 23,679 6.3% 22,584 6.6%

Cost of Sales (313,017) (83.3)% (285,197) (83.0)%

Freight forwarding and shipping agency (297,475) (79.2)% (269,897) (78.6)%

Other land-based logistics business (15,542) (4.1)% (15,300) (4.5)%

Gross Profit 62,818 16.7% 58,396 17.0%

Other income and gains (excluding bank

interest income and investment income) 72 0.1% 917 0.3%

Administrative expenses (25,729) (6.8)% (26,007) (7.6)%

Other expenses and losses — — (10) —

Share of profit and losses of:

Joint ventures 5,079 1.4% 5,528 1.6%

Associates 352 0.1% 293 0.1%

Segment results 42,592 11.3% 39,117 11.4%



Revenue

The revenue of the Group’s land-based logistics business before

inter-segment elimination increased by approximately 9.4% from


2016 to approximately US$375.8 million for the corresponding

period in 2017. This increase was mainly attributable to the following:

‧ Freight forwarding and shipping agency . Revenue of the

Group’s freight forwarding and shipping agency business

increased by approximately 9.7% from approximately

US$321.0 million for the six months ended 30 June 2016

to approximately US$352.2 million for the corresponding

period in 2017. This primarily reflected the continuous growth

in the freight forwarding volume from 817,434 TEU for the

six months ended 30 June 2016 to 900,213 TEU for the

corresponding period in 2017, which offset the decrease in

the average freight forwarding rate from US$342.3/TEU for

the six months ended 30 June 2016 to US$341.4/TEU for the


‧ Other land-based logistics businesses . Revenue of the

Group’s other land-based logistics business increased by

approximately 4.9% from approximately US$22.6 million

for the six months ended 30 June 2016 to approximately

US$23.7 million for the corresponding period in 2017. This

increase was primarily attributable to the expansion in land

transportation, warehouse and depot businesses.

Cost of Sales

The cost of sales of the Group’s land-based logistics business

increased by approximately 9.7% from approximately US$285.2


US$313.0 million for the corresponding period in 2017. The increase

was mainly a combined effect of the following:

‧ Freight forwarding and shipping agency . Cost of sales of

freight forwarding and shipping agency business increased by



US$297.5 million for the corresponding period in 2017,

primarily reflecting the increase in the Group’s freight

forwarding volume.

‧ Other land-based logistics businesses. Cost of sales of the

Group’s other land-based logistics business increased by



US$15.5 million for the corresponding period in 2017. This

increase primarily reflected the cost increase in connection

with the expansion in land transportation, warehouse and

depot businesses.

Gross Profit and Gross Profit Margin

As a result of the foregoing, the gross profit of the Group’s land-

based logistics business increased by approximately 7.5% from


2016 to approximately US$62.8 million for the corresponding period

in year 2017. The gross profit margin of the Group’s land-based

logistics business were 16.7% and 17.0% for the six months ended

30 June 2017 and 2016, respectively.



Other income and gains (excluding bank interest income and

other investment income) of the Group’s land-based business was

approximately US$0.1 million and US$0.9 million for the six months

ended 30 June 2017 and 2016, respectively. The decrease was

primarily attributable to the decrease in the government subsidies.


Administrative expenses of the Group’s land-based logistics

business decreased by approximately 1.2% from approximately

US$26.0 mill ion for the six months ended 30 June 2016 to

approximately US$25.7 million for the corresponding period in the six

months ended 30 June 2017. The decrease was a result of the on-

going cost control and the increased management efficiency applied

in the Group on the whole.


Other expenses and losses incurred by the Group’s land-based

logistics business for the six months ended 30 June 2017 was

comparable to the corresponding period for 2016.


Share of Profits of Joint Ventures

The Group’s share of profits of joint ventures decreased by

approximately US$0.4 million from approximately US$5.5 million

for the six months ended 30 June 2016 to approximately US$5.1

million for the corresponding period in 2017. There was no material

fluctuation to the amount.

Share of Profits of Associates

The Group’s share of profits of associates was approximately

US$0.4 million and US$0.3 million for the six months ended 30 June

2017 and 2016, respectively. There was no material fluctuation to

the amount.

Segment Results

As a result of the foregoing, the segment results of the Group’s land-

based logistics business increased by approximately 9.0% from


2016 to approximately US$42.6 million for the corresponding period

in 2017.

LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES

Total assets of the Group increased by approximately 3.7% from

approximately US$1,455.6 million as at 31 December 2016 to

approximately US$1,508.8 million as at 30 June 2017. As at 30

June 2017, the Group had cash and bank balances amounting to

approximately US$408.9 million, mainly denominated in US dollar,

Renminbi, Japanese Yen and other currencies.

Total liabilities of the Group increased by approximately 2.8%

from approximately US$568.4 million as at 31 December 2016 to

approximately US$584.1 million as at 30 June 2017. At 30 June

2017, the Group had secured and unsecured interest-bearing

bank loans of approximately US$380.9 million and US$35.1

million, respectively. The maturity profile is spread over a period,

with approximately US$91.1 million repayable within one year or

on demand, approximately US$54.7 million within the second

year, approximately US$151.1 million within third to fifth years and

approximately US$119.1 million beyond five years.

Further, the Group has transactional currency exposures. Such

exposures arise from sales or purchases by operating units in

currencies other than the units’ functional currencies. As at 30 June

2017, the Group hedged approximately 23.0% (31 December 2016:

27.0%) of its foreign currency sales for which firm commitments

existed at the end of the reporting period.

As at 30 June 2017, the Group had current ratio (being the current

assets divided by the current liabilities) of approximately 2.0 which

was the same in the amount as at 31 December 2016. The Group

monitors capital using a gearing ratio, which is net debt divided by

the adjusted capital plus net debt. The Group’s policy is to maintain

a healthy gearing ratio. Net debt includes interest-bearing bank

borrowings, trade and other payables, accruals, amounts due to

related companies, less cash and cash equivalents. Adjusted capital

includes equity attributable to owners of the parent less the hedging

reserve. The Group’s gearing ratio was 16% and 20% as at 30 June

2017 and 31 December 2016, respectively.

CONTINGENT LIABILITIES

As at 30 June 2017, the Group had no significant contingent

liabilities.

CHARGE ON ASSETS

As at 30 June 2017, the Group’s bank loans were secured by

mortgages over the Group’s container vessels and dry-bulk vessels

which had an aggregate carrying value at the end of the reporting

period of approximately US$608.5 million (31 December 2016:

US$650.3 million).



EMPLOYEE AND REMUNERATION POLICIES

As at 30 June 2017, the Group had an aggregate of 1,188 full-

time employees (excluding crew members, 30 June 2016: 1,266).

The related employees’ costs for the period (including directors’

emoluments) amounted to approximately US$41.1 million (30 June

2016: US$39.8 million). The Group recruited and promoted individual

persons according to their strength and development potential. The

Group determined the remuneration packages of all employees

(including the directors) with reference to corporate performance,

individual performance and current market salary scale. Further,

the Group adopted the pre-IPO share option scheme and post-IPO

share option scheme on 10 September 2010. Further information of

those share option schemes will be available in the interim report of

the Company.

SIGNIFICANT INVESTMENTS

For the six months ended 30 June 2017, the Group did not have any

significant investments.

MATERIAL ACQUISITIONS AND DISPOSALS

For the six months ended 30 June 2017, the Group did not have any

material acquisitions and disposals of its subsidiaries and associated

companies.

FUTURE PLANS FOR MATERIAL INVESTMENTS OR

CAPITAL ASSETS

The Company will continue to purchase container vessels and/or

containers and invest in land-based logistic projects, as and when

appropriate. The Company expected that the internal financial

resources and bank borrowings will be sufficient to meet the

necessary funding requirements. Save as the announcement of the

Company dated 14 August 2017 in relation to exercise of options

for the construction of two container vessels and contracts for the

construction of two additional container vessels, the Company does

not have any future plans for significant investments or capital assets

as at the date of this report.

Other Information


INTERIM DIVIDEND

At the meeting of the board of directors of the Company (the “Board”)

held on Friday, 18 August 2017, the Board has resolved to declare

an interim dividend of HK10 cents (equivalent to US1.28 cents) per

share for the six months ended 30 June 2017 (six months ended 30

June 2016: HK10 cents) to shareholders whose name appear on the

Register of Members of the Company at the close of business at 4:30

p.m. on Friday, 1 September 2017. The dividend is expected to be

paid on Thursday, 14 September 2017.

There is no arrangement that a shareholder of the Company has

waived or agreed to waive any dividends.

POST-IPO SHARE OPTION SCHEME

On 10 September 2010, the Company adopted a share option

scheme (the “Post-IPO Share Option Scheme”) whereby the

Board can grant options for the subscription of the shares of

the Company (the “Shares”) to the employees, managerial staff

and senior employees and those other persons that the Board

considers that they will contribute or have contributed to the Group

(the “Participants”) as described in the Post-IPO Share Option

Scheme in order to serve as compliment and to reciprocate their

contribution to the Group. The maximum number of shares that

can be issued according to the Post-IPO Share Option Scheme

was 260,000,000 shares which is equivalent to 10% of the issued

capital of the Company after completion of the Global Offering (as

defined in the prospectus of the Company dated 20 September

2010 (the “Prospectus”)). The number of options that may be

granted pursuant to the terms of the Post-IPO Share Option Scheme

shall not exceed 10% of the issued shares immediately after the

completion of the Global Offering. Unless otherwise approved by

the shareholders of the Company in general meeting, the number

of shares that may be granted to the Participants under the options

shall not exceed 1% within any 12-month period (other than those

granted to the substantial shareholders (as defined in the Rules

Governing the Listing of Securities on The Stock Exchange of Hong

Kong Limited (the “Listing Rules”)), or the total number of shares

that may be granted under the options to the independent non-

executive Directors or any of their respective connected persons

shall not exceed 0.1% of the shares in issue of the Company from

time to time. There is no minimum period that the options must be

held before they become exercisable, and the options granted shall

be exercised within the period decided by the Board, however no

options shall be exercised 10 years after they have been granted.

The exercise price of the option shall be the higher of (a) the closing

price of the Shares on the daily quotation sheet of The Stock

Exchange of Hong Kong Limited (the “Stock Exchange”) on the

date of grant; (b) the average closing price of the Shares on the daily

quotation sheet of the Stock Exchange for the five business days

immediately preceding the date of grant; and (c) nominal value of the

Share.

Each grantee shall pay a consideration of HK$1.00 at the time the

option is granted. The Post-IPO Share Option Scheme takes effect

from the date it was adopted and shall remain effective within a

period of 10 years from that date.

Other Information


The followings are details of the options granted pursuant to the Post-IPO Share Option Scheme but not yet exercised for the six months ended

30 June 2017:

Grantee and position

Date of grant

of options

Options

outstanding

as at

1 January 2017

Number of

options of

granted during

the period

Number

of options

exercised/

cancelled/

lapsed during

the period

Number of

options not yet

exercised on

30 June 2017

Approximate

percentage of

shareholding

upon the

exercise

of the options

Executive Director

YANG Shaopeng 10 March 2015 1,000,000 — 1,000,000 —

YANG Xianxiang 10 March 2015 1,000,000 — 1,000,000 —

LIU Kecheng 10 March 2015 400,000 — 400,000 —

25 October 2011 300,000 — 300,000

XUE Peng 10 March 2015 400,000 — — 400,000 0.03%

25 October 2011 300,000 — — 300,000

LAI Zhiyong 10 March 2015 600,000 — — 600,000 0.03%

25 October 2011 100,000 — — 100,000

XUE Mingyuan 10 March 2015 600,000 — — 600,000 0.04%

25 October 2011 500,000 — — 500,000

Independenet

Non-executive Director

TSUI Yung Kwok 10 March 2015 400,000 — 400,000 —

YEUNG Kwok On 10 March 2015 400,000 — 400,000 —

LO Wing Yan, William 10 March 2015 400,000 — — 400,000 0.02%

NGAI Wai Fung 10 March 2015 400,000 — 400,000 —

25 October 2011 400,000 — 400,000 —

Others

Other employees 10 March 2015 7,855,000 — 1,790,000 6,065,000 0.23%

25 October 2011 2,815,000 — 745,000 2,070,000 0.08%

Total 17,870,000 — 6,835,000 11,035,000 0.42%

As at 30 June 2017, the Company had 11,035,000 share options outstanding under the Post-IPO Share Option Scheme, which represented

approximately 0.42% of the Shares of the Company in issue as at 30 June 2017.


PRE-IPO SHARE OPTION SCHEME

The Company adopted a pre-IPO share option scheme on 10

September 2010 (the “Pre-IPO Share Option Scheme”). The

purpose of the Pre-IPO Share Option Scheme is to reward the

contribution of certain employees, executives or officers of the

Company made or may have made to the growth of the Company

and/or the listing of Shares on the Stock Exchange. The principal

terms of the Pre-IPO Share Option Scheme, which were confirmed

and approved by resolutions in writing of all the Shareholders passed

on 10 September 2010, are substantially the same as the terms of

the Post-IPO Share Option Scheme except that:

(a) The subscription price per share shall be a price equivalent

to a 20% discount to the Offer Price of the Shares under the

Global Offering, that means HK$3.824 per share;

(b) The total number of shares involved in the Pre-IPO Share

Option Scheme was 79,160,000 shares, which is equivalent

to approximately 3.0% of the Shares in issue of the Company

after completion of the Global Offering; and

(c) the eligible participants under the Pre-IPO Share Option

Scheme are the full-time employees, executives or officers

(including executive, non-executive and independent non-

executive Directors) of the Company or the full-time employees

of any of the subsidiaries of the level of manager or above

and other full-time employees of the Company or any of the

subsidiaries who have been in employment with the Company

for over one year prior to the date of the adoption of the Pre-

IPO Share Option Scheme or any other persons who, in the

sole opinion of the Board, will contribute or have contributed

to the Company and/or any of the subsidiaries;

(d) the conditions which the Board may in its absolute discretion

to consider (including, without limitation, any minimum period

for which an Option must be held before it can be exercised

and/or any performance targets which must be achieved

before an Option can be exercised) as it may think fit; and

(e) save for the options which have been granted under the Pre-

IPO Share Option Scheme, no further options will be offered

or granted under the Pre-IPO Share Option Scheme, as the

right to do so will terminate upon the listing of the Shares on

the Stock Exchange.

The followings are details of the options granted pursuant to the Pre-IPO Share Option Scheme but not yet exercised for the six months ended

30 June 2017:

Grantee and position

Date of grant

of options

Number of

options granted

and outstanding

as at

1 January 2017

Number of

options exercised/

cancelled/

lapsed during

the period

Number of

options not yet

exercised on

30 June 2017

Approximate

percentage

of shareholding

upon the exercise

of the options

Executive Director

LIU Kecheng 10 September 2010 800,000 800,000 — —

XUE Peng 10 September 2010 800,000 800,000 — —

LAI Zhiyong 10 September 2010 200,000 — 200,000 0.01%

XUE Mingyuan 10 September 2010 800,000 — 800,000 0.03%

Others

Other employees 10 September 2010 42,396,000 16,272,000 26,124,000 0.99%

Total 44,996,000 17,872,000 27,124,000 1.03%

Other Information


As at 30 June 2017, the Company had 27,124,000 share options

outstanding under the Pre-IPO Share Option Scheme, which

represented approximately 1.03% of the Shares of the Company in

issue as at 30 June 2017.

The grantees to whom an option has been granted under the Pre-

IPO Share Option Scheme will be entitled to exercise his/her option

in the following manner:

(a) up to 25% of the Shares that are subject to the Option so

granted to him/her (rounded down to the nearest whole

number) at any time during the period commencing from the

first anniversary of 6 October 2010 (the “Listing Date”) and

ending on the second anniversary of the Listing Date;

(b) up to 25% of the Shares that are subject to the Option so



second anniversary of the Listing Date and ending on the third

anniversary of the Listing Date;

(c) up to 25% of the Shares that are subject to the Option so



third anniversary of the Listing Date and ending on the fourth

anniversary of the Listing Date; and

(d) such number of Shares that are subject to the Option so

granted to him/her less the number of Shares in respect of

which the Options has been exercised at any time during the

period commencing from the fourth anniversary of the Listing

Date and ending on the expiry of the option period.

Upon acceptance of the Options, the grantee shall pay HK$1.00

as consideration for each grant of the Option. The Options granted

under the Pre-IPO Share Option Scheme are not transferable and

options not exercised within the exercise period above will lapse and

cease to be of further effect.

Other details of the Pre-IPO Share Option Scheme are set forth in

the Prospectus.


INTEREST AND SHORT POSITIONS OF DIRECTORS IN THE SHARES, UNDERLYING SHARES OR

DEBENTURES

As at 30 June 2017, the interest or short position of the Directors or chief executives of the Company in the Shares, underlying Shares and

debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)

required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short

positions which they were taken or deemed to have under such provisions of the SFO) or which would be required, pursuant to section 352 of

the SFO, to be entered in the register referred to therein, or which would be required, pursuant to Model Code for Securities Transactions by

Directors of Listed Companies (the “Model Code”) as set out in Appendix 10 of the Listing Rules, are as follows:

(i) Interest in the Company

Name of Director Nature of Interest

Number

of Shares (1)

Approximate

percentage

of Shareholding

YANG Shaopeng(2) Beneficiary of the Pengli Trust 1,375,390,231(L) 52.11%

Beneficial Owner 10,619,000(L) 0.40%

YANG Xianxiang Beneficial Owner 8,220,000(L) 0.03%

LIU Kecheng Beneficial Owner 1,000,000(L) 0.04%

XUE Peng(3) Settlor of the Xue Trust 12,866,176(L) 0.49%

Beneficial Owner 800,000(L) 0.03%

LAI Zhiyong(4) Beneficiary of the Go Thrive Trust 3,037,847(L) 0.12%

Beneficial Owner 185,000(L) 0.02%

XUE Mingyuan(4) Beneficiary of the Go Thrive Trust 1,906,100(L) 0.07%

TSUI Yung Kwok Beneficial Owner 800,000(L) 0.02%

YEUNG Kwok On Beneficial Owner 901,000(L) 0.04%

NGAI Wai Fung Beneficial Owner 800,000(L) 0.03%

Notes:

(1) The letters “L” denotes the person’s long position in the Shares.

(2) 1,375,390,231 Shares are held by Resourceful Link Management

Limited (“Resourceful Link”). The issued share capital of

Resourceful Link is owned as to 79.82% by Better Master. Better

Master is owned as to 100% by UBS Nominees Limited. UBS

Trustees (B.V.I.) Limited, as the trustee, holds such interests for

the beneficiaries of the Pengli Trust, namely Mr. YANG Shaopeng

and his family. The Pengli Trust is a revocable discretionary trust

established under the laws and regulations of the BVI. Mr. YANG

Shaopeng is the settlor and a beneficiary of the Pengli Trust.

(3) 12,866,176 Shares were held by Watercrests Profits Limited, which

was owned as to 50.3% by Add Investments Company Limited,

which was owned as to 100% by JTC Trustees (BVI) Limited as the

trustee of the Xue Trust holding such interests for the beneficiary of

the Xue Trust, namely Ms. Jiao Lei, the spouse of Mr. XUE Peng.

Mr. XUE Peng is the settlor.

(4) 3,037,847 Shares and 1,906,100 Shares are held by Go Thrive

Limited, which is wholly owned by Mr. ZHAO Zhiyong, as the trustee

holding such interests for the beneficiaries of Go Thrive Trust,

including Mr. LAI Zhiyong and Mr. XUE Mingyuan.

Other Information


(ii) Interest in underlying Shares

Name of Director Nature of Interest

Number of Shares

in the Company

subject to options

under the

Pre-IPO Share

Option Scheme

Number of Shares

in the Company

subject to options

under the

Post-IPO Share

Option Scheme

Approximate

percentage

of shareholding

attributable

to the options

under the Pre-IPO

Share Option

Scheme and

Post-IPO Share

Option Scheme (Note)

YANG Shaopeng Beneficial owner — —

YANG Xianxiang Beneficial owner — —

LIU Kecheng Beneficial owner — —

XUE Peng Beneficial owner — 700,000 0.03%

LAI Zhiyong Beneficial owner 200,000 700,000 0.03%

XUE Mingyuan Beneficial owner 800,000 1,100,000 0.07%

TSUI Yung Kwok Beneficial owner — —

YEUNG Kwok On Beneficial owner — —

LO Wing Yan, William Beneficial owner — 400,000 0.02%

NGAI Wai Fung Beneficial owner — —

Note: Assuming full exercise of the options under both the Pre-IPO Share Option Scheme and the Post-IPO Share Option Scheme


Notes:

(1) Resourceful Link is interested in approximately 52.11% of the

issued share capital of the Company. Resourceful Link is owned as

to 79.82% by Better Master, which is owned as to 100% by UBS

Nominees Limited. UBS Trustees (B.V.I.) Limited, as the trustee,

holds such interests for the beneficiaries of the Pengli Trust, namely

Mr. YANG Shaopeng and his family. The Pengli Trust is a revocable

discretionary trust established under the laws and regulations of

the BVI. Mr. YANG Shaopeng is the settlor and a beneficiary of the

Pengli Trust.

(2) Resourceful Link is interested in approximately 52.11% of the

issued share capital of the Company. Jixiang Limited is interested

in 17.00% of the issued share capital of Resourceful Link. Jixiang

Limited is in turn owned as to 100% by UBS Nominees Limited.

UBS Trustees (B.V.I.) Limited, as the trustee, holds such interests for

the beneficiaries of the Jixiang Trust, namely Mr. YANG Xianxiang

and his family. The Jixiang Trust is a revocable discretionary trust

established under the laws and regulations of the BVI. Mr. YANG

Xianxiang is the settlor and a beneficiary of the Jixiang Trust. YANG

Xianxiang is the settlor and a beneficiary of the Jixiang Trust.

(3) Resourceful Link is interested in approximately 52.11% of the issued

share capital of the Company. Yicheng Group Limited is interested

in 3.18% of the issued share capital of Resourceful Link. Yicheng

Group Limited is in turn owned as to 100% by UBS Nominees

Limited. UBS Trustees (B.V.I.) Limited, as the trustee, holds such

interests for the beneficiaries of the Yicheng Trust, namely Mr.

LIU Kecheng and his family. The Yicheng Trust is a revocable

discretionary trust established under the laws and regulations of the

BVI. Mr. LIU Kecheng is the settlor and a beneficiary of the Yicheng

Trust.

(iii) Interest in associated corporations

Name of Director Name of associated corporation Number of shares

Percentage

of Shareholding

YANG Shaopeng(1) Resourceful Link 55,290 79.82%

YANG Xianxiang(2) Resourceful Link 11,776 17.00%

LIU Kecheng(3) Resourceful Link 2,205 3.18%

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS

So far as is known to any Director, as at 30 June 2017, the following persons (other than the Directors and chief executives of the Company)

had or deemed or taken to have an interest and/or short position in the Shares or the underlying Shares which would fall to be disclosed under

the provisions of Division 2 and 3 of Part XV of the SFO:

Name Capacity Number of Shares (1)

Percentage

of Shareholding

LIU Rongli(3) Beneficiary of the Pengli Trust 1,384,590,231(L) 52.11%

Resourceful Link(2) Beneficial owner 1,375,390,231(L) 52.11%

Better Master(2) Interest in controlled corporation 1,375,390,231(L) 52.11%

UBS Trustees (B.V.I.) Limited(2) Trustee 1,375,390,231(L) 52.11%

Other Information


Notes:

(1) The letters “L” denotes the person’s long position in the Shares.

(2) Resourceful Link is owned as to 79.82%, 17.00% and 3.18% by Better

Master, Jixiang Limited and Yicheng Group Limited. Better Master is owned

as to 100% by UBS Nominees Limited. UBS Trustees (B.V.I) Limited, as the

trustee, holds such interests for the beneficiaries of the Pengli Trust. Jixiang

Limited is owned as to 100% by UBS Nominees Limited. UBS Trustees

(B.V.I.) Limited as the trustee, holds such interests for the beneficiaries of

the Jixiang Trust. Yicheng Group Limited is owned as to 100% by UBS

Nominees Limited. UBS Trustees (B.V.I.) Limited, as the trustee, holds

such interests for the beneficiaries of the Yicheng Trust. Each of the Pengli

Trust, the Jixiang Trust and the Yicheng Trust is a revocable discretionary

trust established under the laws and regulations of the BVI by certain of the

Directors to hold their family interests in the Company.

(3) Ms. LIU Rongli is the spouse of Mr. YANG Shaopeng and is also deemed to

be interested in all the shares of the Company held by Mr. YANG Shaopeng

by virtue of the SFO.

CORPORATE GOVERNANCE

The Company is committed to maintain a stringent corporate

governance practices and procedures with a view to enhancing

investor confidence and the Company’s accountabil ity and

transparency. For the six months ended 30 June 2017, the Board is

of the view that the Company has complied with the code provisions

set out in the Corporate Governance Code (the “CG Code”) in

Appendix 14 to the Listing Rules and there has been no deviation

from the code provisions set out in the CG code of the six months

ended 30 June 2017.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted its own code of conduct regarding

directors’ dealings in the Company’s securities (the “Code of

Conduct”) on terms no less exacting than the Model Code for

Securities Transactions by Directors of Listed Issuers (the “Model

Code”) as set out in Appendix 10 to the Listing Rules. The Company

has made specific enquiry of all directors regarding any non-

compliance with the Model Code and all Directors confirmed that

they have complied with the Model Code during the six months

ended 30 June 2017.

PURCHASE, SALE AND REDEMPTION OF

SHARES

Neither the Company nor any of its subsidiaries purchased,

redeemed or sold any of the Company’s listed securities during the

six months ended 30 June 2017.

SUFFICIENCY OF PUBLIC FLOAT

Based on information that is publicly available to the Company and

within the knowledge of the Directors as at the date of this report,

the Company maintained the prescribed public float under the Listing

Rules throughout six months ended 30 June 2017.

AUDIT COMMITTEE

The Company has an audit committee (the “Audit Committee”)

which was established in compliance with Rule 3.21 of the Listing

Rules for the purpose of reviewing and providing supervision over the

Group’s financial reporting process and internal controls. The Audit

Committee comprises three members who are the independent

non-executive Directors of the Company, namely Mr. TSUI Yung

Kwok, Dr. LO Wing Yan, William and Mr. NGAI Wai Fung. The Audit

Committee and the Company’s management have reviewed the

accounting principles and practices adopted by the Group, and

discussed internal control and financial reporting matters including

review of the unaudited interim results of the Group for the six

months ended 30 June 2017.

PUBLICATION OF INTERIM REPORT

The interim report of the Company for the six months ended 30 June

2017 containing all the information required by the Listing Rules

will be despatched to the shareholders of the Company and made

available for review on the websites of the Stock Exchange (http://

www.hkexnews.hk) and the Company (http://www.sitc.com) in due

course.

For and on behalf of the Board of Directors

YANG Shaopeng

Chairman

18 August 2017

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the six months ended 30 June 2017


The Board of Directors (the “Board”) of SITC International Holdings Company Limited (the “Company”) hereby presents the unaudited

condensed consolidated interim financial statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the six

months ended 30 June 2017 together with the comparative figures for the corresponding period in 2016. These condensed consolidated interim

financial statements have not been audited, but have been reviewed by the Company’s audit committee.


Notes 2017 2016

US$’000 US$’000

(Unaudited) (Unaudited)

REVENUE 645,553 604,288

Cost of sales (531,838) (500,353)

Gross profit 113,715 103,935

Other income and gains, net 3 8,524 5,994

Administrative expenses (33,701) (35,058)

Other expenses and losses (279) (2,408)

Finance costs 5 (4,176) (3,553)

Share of profits and losses of:

Joint ventures 5,079 5,528

Associates 352 293

PROFIT BEFORE TAX 4 89,514 74,731

Income tax 6 (3,680) (3,420)

PROFIT FOR THE PERIOD 85,834 71,311

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)For the six months ended 30 June 2017



Note 2017 2016

US$’000 US$’000


OTHER COMPREHENSIVE LOSS, NET OF INCOME TAX

Other comprehensive income/(loss) to be reclassified to

profit or loss in subsequent periods:

Cash flow hedges:

Effective portion of changes in fair value of

hedging instruments arising during the period (8,672) (33,804)

Reclassification adjustments for losses included in consolidated profit or loss 270 144

(8,402) (33,660)

Changes in fair value of available-for-sale investments 154 296

Exchange differences on translation of foreign operations 2,148 (2,999)

Share of other comprehensive income of joint ventures 657 45

Share of other comprehensive income/(loss) of associates 280 (224)

Net other comprehensive loss to be reclassified to profit or loss in subsequent periods (5,163) (36,542)

OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF INCOME TAX (5,163) (36,542)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 80,671 34,769

Profit for the period attributable to:



85,834 71,311

Total comprehensive income for the period attributable to:



80,671 34,769

EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY 8

Basic (US cents per share) 3.24 2.70

Diluted (US cents per share) 3.23 2.70

Condensed Consolidated Statement of Financial Position30 June 2017


30 June 31 December

Notes 2017 2016

US$’000 US$’000

(Unaudited) (Audited)

NON-CURRENT ASSETS

Property, plant and equipment 9 904,187 925,749

Prepaid land lease payments 18,166 17,928

Advance payments for acquisition of items of property, plant and equipment 4,225 —

Goodwill 1,046 1,019

Prepayments 1,057 1,057

Investments in joint ventures 33,908 31,268

Investments in associates 11,241 10,610

Available-for-sale investments 22,390 16,745

Derivative financial instruments 114 179

Total non-current assets 996,334 1,004,555

CURRENT ASSETS

Bunkers 15,129 13,749

Trade receivables 10 60,770 59,379

Prepayments, deposits and other receivables 20,403 12,610

Due from related companies 1,128 111

Principal-protected investment deposits at fair value through profit or loss 4,802 11,372

Derivative financial instruments 1,324 905

Cash and bank balances 408,914 352,957

Total current assets 512,470 451,083

CURRENT LIABILITIES

Trade payables 11 120,392 118,278

Other payables and accruals 45,950 39,513

Due to related companies — 29

Derivative financial instruments 395 1

Bank borrowings 91,155 63,712

Income tax payables 1,283 1,006

Total current liabilities 259,175 222,539

NET CURRENT ASSETS 253,295 228,544

TOTAL ASSETS LESS CURRENT LIABILITIES 1,249,629 1,233,099

Condensed Consolidated Statement of Financial Position (continued)30 June 2017


30 June 31 December

Note 2017 2016

US$’000 US$’000


TOTAL ASSETS LESS CURRENT LIABILITIES 1,249,629 1,233,099

NON-CURRENT LIABILITIES

Bank borrowings 324,879 345,859

Net assets 924,750 887,240

EQUITY

Equity attributable to shareholders of the Company

Issued capital 12 34,029 33,713

Reserves 883,711 846,284

917,740 879,997

Non-controlling interests 7,010 7,243

Total equity 924,750 887,240

Condensed Consolidated Statement of Changes in EquityFor the six months ended 30 June 2017


Six

mo

nths

end

ed 3

0 Ju

ne 2

016

Attrib

utable

to sh

areho

lders

of the

Com

pany

Availa

ble-

for-sa

le

Share

Capit

alPR

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are-b

ased

Share

inves

tmen

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dpre

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ption

Merge

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alco

mpen

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nop

tion

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aluati

onflu

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taine

dco

ntroll

ingTo

tal

capit

alac

coun

tres

erve

reserv

efun

dsres

erve

reserv

eres

erve

reserv

eres

erve

reserv

epro

fitsTo

talint

erests

equit

y

(Una

udite

d)(U

naud

ited)

(Una

udite

d)(U

naud

ited)

(Una

udite

d)(U

naud

ited)

(Una

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d)(U

naud

ited)

(Una

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d)(U

naud

ited)

(Una

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d)(U

naud

ited)

(Una

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d)(U

naud

ited)

(Una

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d)

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

At 1

Janu

ary 20

1633

,675

361,3

1720

2(7,

362)

4,327

(463)

4,597

3,140

6,860

(50)

(3,05

0)44

5,249

848,4

426,9

0785

5,349

Profi

t for th

e peri

od

Othe

r com

prehe

nsive

inco

me/(lo

ss) fo

r the p

eriod

:—

——

——

——

——

——

70,52

170

,521

790

71,31

1

Ch

ange

s in f

air va

lue of

availa

ble-fo

r-sale

inves

tmen

ts, ne

t of in

come

tax

——

——

——

——

—29

6—

—29

6—

296

Ca

sh flo

w he

dges

, net

of inc

ome t

ax—

——

——

——

—(33

,660)

——

—(33

,660)

—(33

,660)

Ex

chan

ge di

fferen

ces o

n tran

slatio

n of

foreig

n ope

ration

s—

——

——

——

——

—(2,

879)

—(2,

879)

(120)

(2,99

9)

Sh

are of

othe

r com

prehe

nsive

inco

me/(lo

ss) o

f:

- Join

t ven

tures

——

——

——

——

——

45—

45—

45

- Ass

ociat

es—

——

——

——

——

—(22

4)—

(224)

—(22

4)

Total

comp

rehen

sive i

ncom

e/(los

s) for

the p

eriod

——

——

——

——

(33,66

0)29

6(3,

058)

70,52

134

,099

670

34,76

9

Acqu

isition

of no

n-con

trollin

g inte

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——

——

——

——

——

——

—16

016

0

Issue

of sh

ares u

pon e

xerci

se of

share

optio

ns

un

der p

re-IPO

share

optio

n sch

eme (

note

12)

311

5—

——

——

(6)—

——

—11

2—

112

Issue

of sh

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pon e

xerci

se of

share

optio

ns

un

der p

ost-IP

O sh

are op

tion s

chem

e (no

te 12

)—

4—

——

——

(1)—

——

—3

—3

Share

optio

n exp

ense

——

——

——

—48

7—

——

—48

7—

487

Trans

fer to

PRC

reserv

e fun

ds—

——

—55

——

——

——

(55)

——

—

Divide

nds p

aid to

no

n-con

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g equ

ity ho

lders

of su

bsidi

aries

——

——

——

——

——

——

—(77

4)(77

4)

Final

2015

divid

end p

aid—

——

——

——

——

——

(54,09

6)(54

,096)

—(54

,096)

At 30

June

2016

33,67

836

1,436

202

(7,36

2)4,3

82(46

3)4,5

973,6

20(26

,800)

246

(6,10

8)46

1,619

829,0

476,9

6383

6,010

Condensed Consolidated Statement of Changes in Equity (continued)For the six months ended 30 June 2017


Six

mo

nths

end

ed 3

0 Ju

ne 2

017

Attri

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shar

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naud

ited)

(Una

udite

d)(U

naud

ited)

(Una

udite

d)

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

US$’

000

At 1

Janu

ary 20

1733

,713

362,7

87*

202*

(7,36

2)*4,5

43*

(463)*

4,597

*3,7

71*

2,788

*27

5*(5,

140)*

480,2

86*

879,9

977,2

4388

7,240

Profi

t for th

e peri

od

Othe

r com

prehe

nsive

inco

me/(lo

ss) fo

r the p

eriod

:—

——

——

——

——

——

85,07

885

,078

756

85,83

4

Ch

ange

s in f

air va

lue of

availa

ble-fo

r-sale

inves

tmen

ts, ne

t of in

come

tax

——

——

——

——

—15

4—

—15

4—

154

Ca

sh flo

w he

dges

, net

of inc

ome t

ax—

——

——

——

—(8,

402)

——

—(8,

402)

—(8,

402)

Ex

chan

ge di

fferen

ces o

n tran

slatio

n of

foreig

n ope

ration

s—

——

——

——

——

—1,9

35—

1,935

213

2,148

Sh

are of

othe

r com

prehe

nsive

inco

me of

:

- Join

t ven

tures

——

——

——

——

——

657

—65

7—

657

- Ass

ociat

es—

——

——

——

——

—28

0—

280

—28

0

Total

comp

rehen

sive i

ncom

e/(los

s) for

the p

eriod

——

——

——

——

(8,40

2)15

42,8

7285

,078

79,70

296

980

,671

Acqu

isition

of no

n-con

trollin

g

int

erests

of a

subs

idiary

——

——

——

——

——

——

—97

97

Issue

of sh

ares u

pon e

xerci

se of

share

optio

ns

un

der p

re-IPO

share

optio

n sch

eme (

note

12)

229

8,935

——

——

—( 4

64)

——

——

8,700

—8,7

00

Issue

of sh

ares u

pon e

xerci

se of

share

optio

ns

un

der p

ost-IP

O sh

are op

tion s

chem

e (no

te 12

)87

4,336

——

——

—(1,

016)

——

——

3,407

—3,4

07

Trans

fer to

share

optio

n res

erve

up

on th

e forf

eiture

or ex

piry o

f sha

re op

tions

——

——

——

—(18

)—

——

18—

——

Share

optio

n exp

ense

——

——

——

—10

5—

——

—10

5—

105

Trans

fer to

PRC

reserv

e fun

ds—

——

—26

2—

——

——

—(26

2)—

——

Divide

nds p

aid to

no

n-con

trollin

g equ

ity ho

lders

of su

bsidi

aries

——

——

——

——

——

——

—(1,

299)

(1,29

9)

Final

2016

divid

end p

aid—

——

——

——

——

——

(54,17

1)(54

,171)

—(54

,171)

At 30

June

2017

34,02

937

6,058

*20

2*(7,

362)*

4,805

*(46

3)*4,5

97*

2,378

*(5,

614)*

429*

(2,26

8)*51

0,949

*91

7,740

7,010

924,7

50

* Th

ese

rese

rve

acco

unts

com

pris

e th

e co

nsol

idat

ed r

eser

ves

of U

S$8

83,7

11,0

00 (u

naud

ited)

(31

Dec

embe

r 20

16: U

S$8

46,2

84,0

00) i

n th

e co

nden

sed

cons

olid

ated

sta

tem

ent

of fi

nanc

ial p

ositi

on a

s at

30

June

2017

.

Condensed Consolidated Statement of Cash FlowsFor the six months ended 30 June 2017



2017 2016

US$’000 US$’000


CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 104,459 84,879

Interest income received 2,916 1,285

Interest paid (3,943) (3,530)

Hong Kong profits tax refund/(paid) (22) 97

Overseas tax paid (3,381) (1,961)

Net cash flows from operating activities 100,029 80,770

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of items of property, plant and equipment (3,801) (51,957)

Proceeds from disposal of items of property, plant and equipment 1,021 —

Advance payments for acquisition of items of property, plant and equipment (825) (8,030)

Investment in a joint venture — (94)

Acquisition of subsidiaries — 160

Proceeds from sale of principal-protected investment deposits 55,702 66,357

Purchase of principal-protected investment deposits (49,132) (119,692)

Proceeds from disposal of an available-for-sale investment 3,103 —

Purchase of listed debt investments (7,627) (11,069)

Decrease/(increase) in non-pledged time deposits with original maturity of

over three months but less than one year when acquired (128,957) 118,105

Decrease in non-pledged time deposits with original maturity of over one year when acquired — 3,500

Dividends received from joint ventures 2,281 2,044

Dividends received from associates — 49

Other cash flows from investing activities, net 1,113 196

Net cash flows used in investing activities (127,122) (431)

CASH FLOWS FROM FINANCING ACTIVITIES

Issue of shares pursuant to exercise of share options 12,107 —

New bank borrowings 58,769 89,695

Repayment of bank borrowings (60,850) (72,441)

Dividends paid (54,171) (54,096)

Dividends paid to non-controlling equity holders of subsidiaries (2,501) (1,548)

Other cash flows from financing activities, net — 115

Net cash flows used in financing activities (46,646) (38,275)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (73,739) 42,064

Condensed Consolidated Statement of Cash Flows (continued)For the six months ended 30 June 2017



2017 2016

US$’000 US$’000


NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (73,739) 42,064

Cash and cash equivalents at beginning of period 157,235 157,748

Effect of foreign exchange rate changes, net 739 145

CASH AND CASH EQUIVALENTS AT END OF PERIOD 84,235 199,957

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances other than time deposits 50,296 43,728

Non-pledged time deposits with original maturity of less than three months when acquired 33,939 156,229

Cash and cash equivalents as stated in the condensed consolidated statement of cash flows 84,235 199,957

Non-pledged time deposits with original maturity of over three months when acquired 324,679 90

Cash and cash equivalents as stated in the condensed consolidated statement of financial position 408,914 200,047

Notes to the Condensed Consolidated Interim Financial Statements30 June 2017


1.1 CORPORATE INFORMATION

SITC International Holdings Company Limited (the “Company”) was a limited liability company incorporated in the Cayman Islands. The

registered office address of the Company is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY-1111, Cayman Islands.

The Company’s principal place of business in Hong Kong is located at 21/F, World Trade Centre, 280 Gloucester Road, Causeway Bay,

Hong Kong.

The Company and its subsidiaries (collectively referred to as the “Group”) were principally engaged in the provision of marine,

transportation services, freight forwarding services for marine transportation, depot and warehouse services and related business.

In the opinion of the directors, the immediate holding company of the Company is Resourceful Link Management Limited, which is

incorporated in the British Virgin Islands (the “BVI”), and the ultimate holding company of the Company is Better Master Investments

Limited, which is incorporated in the BVI.

1.2 BASIS OF PREPARATION AND ACCOUNTING POLICIES

These condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard

(“HKAS”) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants and the disclosure

requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing

Rules”). These condensed consolidated interim financial statements are presented in the United States dollar (“US$”) and all values are

rounded to the nearest thousand except when otherwise indicated.

These condensed consolidated interim financial statements have not been audited but have been reviewed by the audit committee of

the Company. They do not include all the information and disclosures required in the annual financial statements, and should be read in

conjunction with the Group’s financial statements for the year ended 31 December 2016.

Changes in accounting policies and disclosures

The accounting policies and basis of preparation adopted in the preparation of these condensed consolidated interim financial statements

are the same as those used in the annual financial statements for the year ended 31 December 2016, except in relation to the following

new and revised Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards,

HKASs and Interpretations) that affect the Group and are adopted for the first time for the current period’s financial statements:

Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses

Amendments to HKAS 7 Disclosure Initiative

Annual Improvements 2012-2014 Cycle Amendments to a number of HKFRSs

The adoption of the above revised HKFRSs did not have any material effect on the financial position or performance of the Group.

1.3 ISSUED BUT NOT YET EFFECTIVE HKFRSs

The Group has not applied the new and revised HKFRSs that have been issued but not yet effective. The Group has already commenced

an assessment of the impact of these new and revised HKFRSs but is not yet in a position to state whether these new and revised

HKFRSs would have a potential impact on its results of operations and financial position.



2. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their services and has two reportable operating

segments as follows:

(a) the sea freight logistics segment is engaged in the provision of marine transportation services and related businesses; and

(b) the land-based logistics segment is engaged in the provision of integrated freight forwarding, marine transportation, shipping

agency, depot and warehousing, trucking and ship brokerage services and related businesses.

Management monitors the results of the Group’s operating segments separately for the purpose of making decisions about resources

allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of

adjusted profit before tax. The adjusted profit before tax is measured consistently with the Group’s profit before tax except that interest

income and finance costs are excluded from such measurement.

Segment assets exclude cash and bank balances, derivative financial instruments and other unallocated corporate assets as these assets

are managed on a group basis.

Segment liabilities exclude bank borrowings, derivative financial instruments, income tax payables and other unallocated corporate

liabilities as these liabilities are managed on a group basis.

Intersegment sales and transfers are transacted in accordance with the terms and conditions mutually agreed by parties involved.


2. OPERATING SEGMENT INFORMATION (continued)

Six months ended 30 June 2017

Sea freight Land-based

logistics logistics Total

US$’000 US$’000 US$’000

(Unaudited) (Unaudited) (Unaudited)

Segment revenue:

Sales to external customers 285,975 359,578 645,553

Intersegment sales 234,529 16,257 250,786

520,504 375,835 896,339

Reconciliation:

Elimination of intersegment sales (250,786)

Revenue 645,553

Segment results 46,929 42,592 89,521

Reconciliation:

Bank interest income 3,395

Interest income on principal-protected investment deposits 330

Interest income on listed debt investments 278

Gains on disposal of available-for-sale investments 166

Finance costs (4,176)

Profit before tax 89,514

As at 30 June 2017

Segment assets 901,559 268,470 1,170,029

Reconciliation:

Elimination of intersegment receivables (121,593)

Corporate and other unallocated assets 460,368

Total assets 1,508,804

Segment liabilities 121,529 158,145 279,674

Reconciliation:

Elimination of intersegment payables (121,593)

Corporate and other unallocated liabilities 425,973

Total liabilities 584,054



2. OPERATING SEGMENT INFORMATION (continued)

Six months ended 30 June 2016

Sea freight Land-based

logistics logistics Total

US$’000 US$’000 US$’000


(restated) (restated)

Segment revenue:

Sales to external customers 276,817 327,471 604,288

Intersegment sales 192,933 16,122 209,055

469,750 343,593 813,343

Reconciliation:

Elimination of intersegment sales (209,055)

Revenue 604,288

Segment results 37,215 39,117 76,332

Reconciliation:

Bank interest income 1,037

Interest income on principal-protected investment deposits 726

Interest income on listed debt investment 189

Finance costs (3,553)

Profit before tax 74,731

As at 31 December 2016

Segment assets 908,570 281,135 1,189,705

Reconciliation:

Elimination of intersegment receivables (141,755)

Corporate and other unallocated assets 407,688

Total assets 1,455,638

Segment liabilities 108,474 184,823 293,297

Reconciliation:

Elimination of intersegment payables (141,755)

Corporate and other unallocated liabilities 416,856

Total liabilities 568,398


3. OTHER INCOME AND GAINS, NET


2017 2016

US$’000 US$’000


Other income

Bank interest income 3,395 1,037

Interest income on

– Principal-protected investment deposits 330 726

– Listed debt investments 278 189

Government subsidies* 498 2,374

Others 10 12

4,511 4,338

Gains

Gain on disposal of items of property, plant and equipment, net 830 30

Gain on disposal of a subsidiary — 18

Gains on disposal of available-for-sale investments 166 —

Fair value gains of derivative instruments – transactions not qualifying as hedges, net 778 —

Realised gain on settlement of derivative financial instruments 1,347 984

Foreign exchange gains, net 892 624

4,013 1,656

Other income and gains, net 8,524 5,994

* The amount represented subsidies received from relevant governmental authorities in Mainland China for the Group’s operation of container lines and logistics

business. There are no unfulfilled conditions or contingencies relating to these grants.



4. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):


2017 2016

US$’000 US$’000


Cost of services provided:

Cost of bunkers consumed 72,765 43,718

Depreciation 25,601 24,612

Others 356,370 352,045

454,736 420,375

Depreciation 27,465 26,554

Less: Amount included in cost of services provided (25,601) (24,612)

1,864 1,942

Recognition of prepaid land lease payments 228 239

Fair value losses on derivative instruments for transactions

not qualifying as hedges, net — 2,235*

Fair value losses on cash flow hedges (transfer from equity), net 270* 144*

* These loss items are included in “Other expenses and losses” on the face of the condensed consolidated statement of profit or loss and other comprehensive

income.

5. FINANCE COSTS

Finance costs are interest on bank loans.


6. INCOME TAX


2017 2016

US$’000 US$’000


Current:

Mainland China 829 532

Hong Kong 295 633

Elsewhere 2,556 2,255

Total tax expense for the period 3,680 3,420

Hong Kong profits tax has been provided at the rate of 16.5% (six months ended 30 June 2016: 16.5%) on the estimated assessable

profits arising in Hong Kong during the period. Taxes on profits assessable in Mainland China and elsewhere have been calculated at the

rates of tax prevailing in the jurisdictions in which the Group operates.

The share of income tax attributable to joint ventures and associates for the six months ended 30 June 2017 amounting to US$1,396,000

(six months ended 30 June 2016: US$1,605,000) and US$38,000 (six months ended 30 June 2016: tax credit of US$3,600) are

included in “Share of profits and losses of joint ventures” and “Share of profits and losses of associates”, respectively, in the condensed

consolidated statement of profit or loss and other comprehensive income.

7. INTERIM DIVIDEND

At the meeting of the board of directors of the Company (the “Board”) held on 18 August 2017, the Board resolved to declare an interim

dividend of HK10 cents (equivalent to US1.28 cents) (six months ended 30 June 2016: HK10 cents) per share, totaling US$33,815,000 (six

months ended 30 June 2016: US$33,644,000).



8. EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY

The calculation of the basic earnings per share amount is based on the profit attributable to shareholders of the Company, and the

weighted average number of ordinary shares of 2,624,372,762 (six months ended 30 June 2016: 2,611,880,291) in issue during the

period.

The calculation of diluted earnings per share amount is based on (i) the profit for the period attributable to shareholders of the Company,

and (ii) the total of the weighted average number of ordinary shares in issue during the period, as used in the basic earnings per share

calculation, and the weighted average of ordinary shares assumed to have been issued at no consideration on the deemed exercise of all

outstanding share options into ordinary shares.

The calculations of basic and diluted earnings per share amount are based on:


2017 2016

US$’000 US$’000


Earnings

Profit attributable to shareholders of the Company,

used in the basic and diluted earnings per share calculation 85,078 70,521

Number of shares

for the six months ended 30 June

2017 2016


Shares

Weighted average number of ordinary shares in issue during

the period, used in the basic earnings per share calculation 2,624,372,762 2,611,880,291

Effect of dilution of share options - weighted average number of ordinary shares 10,612,329 2,270,973

Weighted average number of ordinary shares in issue during

the period, used in the diluted earnings per share calculation 2,634,985,091 2,614,151,264


9. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2017, the Group acquired items of property, plant and equipment at a total cost of US$4,413,000

(six months ended 30 June 2016: US$51,659,000) and disposed of items of property, plant and equipment with an aggregate carrying

amount of US$189,000 (six months ended 30 June 2016: US$11,276,000).

10. TRADE RECEIVABLES

30 June 31 December

2017 2016

US$’000 US$’000


Trade receivables 60,782 59,400

Impairment (12) (21)

60,770 59,379

The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally

required. The credit period is generally 18 days, extending up to three months for major customers. Each customer has a maximum

credit limit. The Group seeks to maintain strict control over its outstanding receivables and overdue balances are reviewed regularly by

senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified

customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancement over its

trade receivable balances. Trade receivables are non-interest-bearing.

An aged analysis of the trade receivables as at the end of reporting period, based on the invoice date and net of provisions, is as follows:

30 June 31 December

2017 2016

US$’000 US$’000


Within 1 month 51,632 49,956

1 to 2 months 6,225 6,139

2 to 3 months 1,376 1,240

Over 3 months 1,537 2,044

60,770 59,379

Included in the Group’s trade receivables are amounts due from the Group’s joint ventures and associates of US$8,469,000

(31 December 2016: US$9,030,000) and US$2,397,000 (31 December 2016: US$118,000), respectively. All of the above amounts are

repayable on credit terms similar to those offered to the major customers of the Group.



11. TRADE PAYABLES

An aged analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

30 June 31 December

2017 2016

US$’000 US$’000


Within 1 month 94,728 97,895

1 to 2 months 15,289 14,489

2 to 3 months 3,566 2,418

Over 3 months 6,809 3,476

120,392 118,278

Included in the Group’s trade payables are amounts due to the Group’s joint ventures, associates and related companies which are

controlled by Mr. Yang Shaopeng, the controlling shareholder of the Company, of US$5,182,000 (31 December 2016: US$4,466,000),

US$3,000 (31 December 2016: US$199,000) and Nil (31 December 2016: US$1,459,000), respectively.

The above balances are repayable within 30 days, on credit terms similar to those offered by major suppliers of the Group.

The trade payables are non-interest-bearing and are normally settled on terms ranging from 15 to 45 days.

12. SHARE CAPITAL

30 June 2017 31 December 2016

HK$’000 US$’000 HK$’000 US$’000

equivalent equivalent

(Unaudited) (Unaudited) (Audited) (Audited)

Authorised:

5,000,000,000 ordinary shares of HK$0.1 each 500,000 500,000

Issued and fully paid:

2,639,312,000 (31 December 2016:

2,614,769,000) ordinary shares of

HK$0.1 each 263,931 34,029 261,477 33,713


12. SHARE CAPITAL (continued)

A summary of the movement in the Company’s issued share capital during the period is as follows:

Number of

issued and

fully paid

ordinary shares Issued share capital

HK$’000 US$’000

equivalent


At 1 January 2017 2,614,769,000 261,477 33,713

Issue of new shares upon exercise of share options (notes) 24,543,000 2,454 316

At 30 June 2017 2,639,312,000 263,931 34,029

Notes:

(a) The subscription rights attaching to 17,808,000 share options issued under the pre-IPO share option scheme were exercised at subscription price of HK$3.824

per share, resulting in the issue of 17,808,000 shares of HK$0.1 each for a total cash consideration, before expenses, of approximately HK$68,098,000 (equivalent

to approximately US$8,700,000). An amount of US$464,000 was transferred from the share option reserve to the share premium account upon the exercise of

the share options.

(b) The subscription rights attaching to 1,445,000 and 5,290,000 share options issued under the post-IPO share option schemes were exercised at the subscription

price of HK$1.968 and HK$4.531 per share respectively, resulting in the issue of 6,735,000 shares of HK$0.1 each for a total cash consideration, before

expenses, of approximately HK$26,813,000 (equivalent to approximately US$3,407,000). An amount of US$1,016,000 was transferred from the share option

reserve to the share premium account upon the exercise of the share options.

13. CAPITAL COMMITMENTS

At 30 June 2017, the Group had capital commitments of US$41,380,000 in total (31 December 2016: Nil) in total, which are contracted

but not provided for, in respect of acquisition of vessels.

14. CONTINGENT LIABILITIES

At the end of the reporting period, the Group had no significant contingent liabilities.



15. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions detailed elsewhere in these condensed interim financial statements, the Group had the following

material transactions with related parties during the period:


2017 2016

US$’000 US$’000


Companies controlled by the Controlling Shareholder:

Container marine transportation services income 8,133 7,394

Freight forwarding services expense for marine transportation 2 —

Shipping agency expenses 860 776

Vessel management income 35 35

Vessel rental expenses 1,941 1,025

Joint ventures:


Freight forwarding services income for marine transportation 262 433

Warehousing expenses 5,124 4,495

Warehousing income — 313

Land and building rental income 840 818

Shipping agency expenses 2,527 1,733

Custom service income — 23

Freight forwarding services expenses 1,097 1,072

Technology outsourcing services income 694 192

Associates:


Freight forwarding services income for marine transportation 132 —

Shipping agency expenses 997 497

Freight forwarding services expenses — 31

The above transactions were conducted in accordance with the terms and conditions mutually agreed by the parties involved.


15. RELATED PARTY TRANSACTIONS (continued)

(b) Compensation of key management personnel of the Group, which are also the directors of the Company, is as follows:


2017 2016

US$’000 US$’000


Short term employee benefits 2,513 2,303

Post-employment benefits 34 33

Equity-settled share option expense 44 200

Total compensation paid to key management 2,591 2,536

(c) Outstanding balances with related companies

The balances with related companies represent balances with companies which are controlled by the Controlling Shareholder, the

joint ventures and the associates. The balances are unsecured, interest-free and repayable on demand.

None of the balances with related companies are either past due or impaired. The financial assets included in the above balances

related to receivables for which there was no recent history of default.

16. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and cash equivalents, restricted bank balances, trade receivables, trade payables,

financial assets included in prepayments, deposits and other receivables, financial liabilities included in other payables and accruals

and amounts due from/to related companies approximate to their carrying amounts largely due to the short term maturities of these

instruments.

The unlisted equity investments of the Group’s available-for-sale investments were stated at cost less impairment because the range of

reasonable fair value estimates is so significant that the directors are of the opinion that their fair values cannot be measured reliably.

The Group’s finance department headed by the finance manager is responsible for determining the policies and procedures for the fair

values measurement of financial instruments. The finance manager reports directly to the Chief Financial Officer and the Audit Committee.

At each reporting date, the finance department analyses the movements in the values of financial instruments and determines the major

inputs applied in the valuation. The valuation is reviewed and approved by the Chief Financial Officer. The valuation process and results

are discussed with the Audit Committee twice a year for interim and annual financial reporting.



16. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (continued)

The fair values of the financial assets and liabilities are included at the amounts at which the instruments could be exchanged in a current

transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to

estimate the fair values:

The fair value of listed equity investments and club debenture of available-for-sale investments at fair value are based on quoted market

prices. The directors believe that the estimated fair values resulting from the changes in quoted market prices, which are recorded in the

consolidated statement of financial position, and the related changes in fair values, which are recorded in other comprehensive income,

are reasonable, and that they were the most appropriate values at the end of the reporting period.

The fair values of held-to-maturity investments and interest-bearing bank borrowings have been calculated by discounting the expected

future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The non-

performance risk from the Group for its interest-bearing bank borrowings as at 30 June 2017 was assessed to be insignificant.

The Group enters into derivative financial instruments with various counterparties, principally financial institutions of creditworthy banks.

Derivative financial instruments, including forward currency contracts and interest rate swaps, are measured using valuation techniques

similar to forward pricing and swap models, using present value calculations. The models incorporate various market observable inputs

including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. The carrying amounts of

forward currency contracts and interest rate swaps are the same as their fair values.

Fair value hierarchy

The following tables illustrate the fair value measurement of the Group’s financial instruments:

Assets measured at fair value

As at 30 June 2017

Fair value measurement using

Quoted prices Significant Significant

in active observable unobservable

markets inputs inputs

(Level 1) (Level 2) (Level 3) Total

US$’000 US$’000 US$’000 US$’000

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Available-for-sale investments:

Listed equity investments, at fair value 3,049 — — 3,049

Unlisted club debentures, at fair value 558 — — 558

Listed debt instruments, at fair value 18,783 — — 18,783

Derivative financial instruments — 1,438 — 1,438

Principal-protected investment deposits — 4,802 — 4,802

22,390 6,240 — 28,630



Assets measured at fair value (continued)







US$’000 US$’000 US$’000 US$’000

(Audited) (Audited) (Audited) (Audited)

Available-for-sale investments:

Listed equity investments, at fair value 2,522 — — 2,522

Unlisted club debentures, at fair value 558 — — 558

Listed debt, at fair value 13,665 — — 13,665

Derivative financial instruments — 1,084 — 1,084

Principal-protected investment deposits — 11,372 — 11,372

16,745 12,456 — 29,201

Liabilities measured at fair value

As at 30 June 2017






US$’000 US$’000 US$’000 US$’000

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Derivative financial instruments — 395 — 395




Liabilities measured at fair value (continued)







US$’000 US$’000 US$’000 US$’000

(Audited) (Audited) (Audited) (Audited)

Derivative financial instruments — 1 — 1

During the period, there were no transfer of fair value measurements between Level 1 and Level 2 (six months ended 30 June 2016: Nil)

and no transfer into or out of Level 3 for both financial assets and financial liabilities (six months ended 30 June 2016: Nil).

17. COMPARTIVE AMOUNTS

Certain comparative amounts have been reclassified to conform to the current period's presentation and disclosures.

Freight income tax incurred on the Group’s sea freight service was previously reported net of the Group’s sea freight revenue in the prior

period. In the opinion of the directors of the Company, it is more appropriate to report freight income tax arising from sea freight services

as income tax charge and hence freight income tax of US$1,882,000 in the six months ended 30 June 2016 was reclassified from

‘Revenue’ to ‘Income tax’ on the face of the condensed statement of profit or loss and other comprehensive income. The effect of which

is to increase each of the Group’s revenue, gross profit and income tax for the six months ended 30 June 2016 by US$1,882,000.

18. APPROVAL OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

These condensed consolidated interim financial statements were approved and authorised for issue by the board of directors on

18 August 2017.

中 報 二零一七年 - sitc.com · sitc international holdings company limited ... a sto c aym...

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中報二零一七年 - sitc.com · sitc international holdings company limited ... a sto c aym...